Amount
Use current financial information and the policy formula, with reasonable allowance for expected growth.
COMMERCIAL INSURANCE SOLUTION
Business interruption insurance
Repairing physical damage is only part of recovery. Business interruption cover can help protect cash flow while an insured event disrupts trading.
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WHO IT MAY SUIT
Businesses that would lose revenue, incur extra costs or face continuing expenses after damage to property or a key location.
Cover is commonly linked to insured material damage. The calculation basis, selected indemnity period and policy extensions need to reflect how the business would actually recover.
WHAT WE REVIEW
- 01Revenue and gross profit basis
- 02Payroll and continuing expenses
- 03Indemnity period
- 04Seasonality and growth trends
- 05Key suppliers, customers and utilities
- 06Alternative premises and extra expense
PRACTICAL COVER REVIEW
The right sum insured is an accounting exercise, not a guess.
Insurance gross profit is not always the same as accounting gross profit. The calculation should follow the policy definition and allow for the period needed to rebuild turnover.
Time
Choose an indemnity period that allows for investigation, approvals, rebuilding, replacement equipment and customer recovery.
Dependencies
Consider suppliers, customers, utilities, access and nearby property where suitable extensions are available.
WHY THE DETAILS MATTER
Reopening the doors does not always end the loss.
Choose a realistic indemnity period
A major loss can involve demolition, design, council approvals, long-lead equipment, rebuilding and a gradual return of customers. Twelve months may be inadequate for some businesses.
Separate fixed and variable costs
Some costs continue during closure while others reduce with turnover. The policy calculation and uninsured working expenses should be prepared with suitable accounting input where needed.
Plan for increased costs of working
Temporary premises, equipment hire, outsourcing, overtime and urgent freight may help maintain revenue. Cover and economic limits vary between policies.
Review connected property cover
The interruption section usually depends on insured physical damage. Property values, machinery cover, prevention-of-access and dependency extensions should be reviewed together.
Cover is subject to insurer acceptance, the policy schedule, applicable policy wording or Product Disclosure Statement, limits, conditions and exclusions. This information is general and does not take into account your objectives, financial situation or needs.
COMMON QUESTIONS
Questions about business interruption insurance.
These answers are general. The quotation, schedule and policy wording determine the cover offered.
What triggers business interruption insurance?
Commonly, interruption must result from insured physical loss or damage under the connected property section. Extensions may apply to certain dependency or access events.
What is an indemnity period?
It is the maximum period for which the policy measures the interruption loss, subject to the wording. It should allow for physical repair and commercial recovery.
Is insurance gross profit the same as accounting gross profit?
Not necessarily. Policy definitions can treat expenses differently. The selected basis should be calculated using the wording and financial information.
Can it cover interruption caused by a supplier?
Some policies offer supplier, customer, utility or prevention-of-access extensions, usually subject to limits and conditions. These are not automatic.
CONNECTED COVER
Look beyond one policy.
We consider how this cover interacts with the rest of your insurance program.
A CONSIDERED REVIEW
Test how long your business could be disrupted.
We can review the calculation basis, indemnity period and dependencies alongside the property insurance program.
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